Elon Musk Rejects Merger Between Tesla and xAI Amid Investment Talks

Elon Musk has publicly stated that he does not support a merger between his electric vehicle company, Tesla, and his artificial intelligence startup, xAI. This announcement came on Monday in response to a query from a user on X, the platform formerly known as Twitter, asking Tesla investors for their views on a potential merger. Musk’s succinct reply was simply “No.”

On the previous day, Musk indicated that he would seek approval from Tesla shareholders for a potential investment in xAI. Earlier, he had expressed enthusiasm for the idea, suggesting that it “would be great” if Tesla could invest in the AI firm. The juxtaposition of these statements highlights Musk’s ongoing strategic considerations regarding the relationship between the two companies.

Tesla and xAI did not provide immediate responses to requests for comments from Reuters. The AI startup, which owns the Grok chatbot, competes directly with other major players in the field, including OpenAI’s ChatGPT.

Financial Landscape and Valuations

In March 2023, xAI was part of a significant acquisition deal involving X, which Musk also owns. The transaction was valued at approximately $33 billion, contributing to a combined group valuation of around $80 billion at that time. Recent reports suggest that xAI has been in discussions to secure additional funding at a valuation exceeding $120 billion, with estimates even reaching as high as $200 billion.

The Wall Street Journal reported that Musk’s other venture, SpaceX, has committed $2 billion to xAI as part of a larger equity round totaling $5 billion. This financial backing underscores Musk’s confidence in the future of xAI and its potential impact on the AI market.

While the possibility of a merger has been dismissed, the investment talks signal Musk’s intent to leverage the strengths of both Tesla and xAI. As the landscape of electric vehicles and artificial intelligence continues to evolve, the relationship between these two entities remains a focal point for investors and industry analysts alike.

The developments surrounding Tesla and xAI highlight the complexities of Musk’s business strategy and his approach to innovation in both the automotive and technology sectors.